1. Although the NBP governor Marek Belka says something different, I regard the zloty, apparently converging into the region of 0.25 euro, as a bit too overvalued these days. Considering the long-term trend of Poland’s current account, I think the currency needs to be cheaper, ideally by 20 per cent as long as I refer to the NBP’s statistics or concessionally by at least 10 per cent, to enter into the ERM2. It does not mean that I disagree with Mr Belka: He is only perfectly faithful as a central banker, who is not supposed to use the monetary policy to directly boost his economy’s export industry, which is others’ job. What Germany did is to fix the mark cheap compared with the then long-term trend of its current account to support its export industry, especially the manufacturing. What China is doing is similar to Germany’s strategy. It is a one-time currency manipulation of an economy to pursue its long-term development at the cost of its short-term purchasing power. If the economy has developed more equity capitals than debts, then its development will be consolidated by that much. The strategy aggravates the international macroeconomic imbalance indeed, but the imbalance occurs in any way as long as ‘markets are always wrong’. Then, it is better to be a creditor nation than a debtor nation in such a financial jungle. It is a method of machiavellianist pragmatism for an economy to survive. After all, the ERM2 programme is itself a form of currency manipulation. It is more important not to be gullible then than to argue for or against currency manipulation. See what is happening to the sucker nations like Ireland and Greece. Keep this talk to yourselves, to avoid political troubles.

2. I do not regard that the MEFO bills being issued to private pension funds as the type of scheme of ‘sweeping debts under the rug’. As I wrote to Mr Sobczyk’s entry dated Nov 18, 2010 9:33 AM, I would rather criticize the European Commission for the stubbornness that will certainly discourage pension reforms throughout the EU. Poland is not all alone but has a friend on this issue: Sweden stands by Poland. Hungary, the economy having already been in the soup, has given in and decided to re-nationalise the private pension funds. I assume that, unlike IOU notes, Poland’s ‘pension bonds’ scheme is being forged merely as a tentative solution for a relatively short period of time during which Poland and Sweden will probably, or rather certainly, lobby in Brussels in an attempt of changing the regulation while they proceed with the pension reform. If their lobbying fails, they may naturally have to re-nationalise all the private pension funds sooner of later, and thousands of financial middlemen may then lose their jobs and blame Fitch for having put too much heat on them. Rather, I think rating agencies should bring the European Union and the commissioners in charge to a kangaroo court in the first place for virtually blocking the pension reform that some of the member states like Poland and Sweden are struggling for if it really wants to care about investors’ welfare.

7:30 am November 27, 2010

Jan wrote:

Although the central bank governor Marek Belka says something different, I regard the zloty, apparently converging into the region of 0.25 euro, as a bit too overvalued these days. Considering the long-term trend of Poland’s current account, I think the currency needs to be cheaper, ideally by 20 per cent as long as I refer to the NBP’s statistics or concessionally by at least 15 per cent, to enter into the ERM2. It does not mean that I disagree with Mr Belka: He is only perfectly faithful as a central banker, who is not supposed to use the monetary policy to directly boost his economy’s export industry, which is others’ job. What Germany did is to fix the mark cheap compared with the then long-term trend of its current account to support its export industry, especially the manufacturing. What China is doing is similar to Germany’s strategy. It is a one-time currency manipulation of an economy to pursue its long-term development at the cost of its short-term purchasing power. If the economy has developed equity capitals faster than its growth, then its development will be consolidated by that much. The strategy aggravates the international macroeconomic imbalance indeed, but the imbalance is aggravated in any way as long as ‘markets are always wrong’. Then, it is better to become a creditor nation than to remain a debtor nation in such a financial jungle. It is a method of machiavellianist pragmatism for an economy to survive. After all, the ERM2 programme is itself a form of currency manipulation. It is more important not to be gullible then than to argue for or against currency manipulation. See what is happening to the sucker nations like Ireland and Greece. Keep this talk to yourselves, to avoid political troubles.

I do not regard that the Polish MEFO bills being issued to private pension funds as the type of scheme of ‘sweeping debts under the rug’. As I wrote to Mr Sobczyk’s entry dated Nov 18, 2010 9:33 AM, I would rather criticize the European Commission for the stubbornness that will certainly discourage pension reforms throughout the EU. Poland is not all alone: Sweden stands by Poland on this issue. Hungary, the economy having already been in the soup, has decided to re-nationalise the private pension funds. I assume that, unlike IOU notes or Nazi MEFO bills, Poland’s ‘pension bonds’ scheme is being forged merely as a tentative solution for a relatively short period of time during which Poland and Sweden will probably, or rather certainly, lobby in Brussels to change the regulation while they proceed with the pension reform. If they fail, they may naturally have to re-nationalise all the private pension funds in the long run, and thousands of financial middlemen may lose their jobs and blame Fitch for having put too much heat on them. Rather, I think rating agencies should bring both the European Union and commissioners in charge to a kangaroo court in the first place for virtually blocking the pension reform that some of the member states like Poland and Sweden are struggling for if it really wants to care about investors’ welfare.

1:36 pm November 27, 2010

Tomek wrote:

So we again we have communist in regime whose main domestic policy is directed by Kremlin. If you are interested have a look at the new gas agreement with Russia - we pay the highest price for gas - USD 370 for 1000m, while on average in EU the price is USD 300 and in US USD 140.

New presiden bronislaw komorowski has many connections with former secret service persons.

10:23 pm November 27, 2010

Jan wrote:

Although the central bank governor Marek Belka says something different, I regard the zloty, apparently converging into the region of 0.25 euro, as a bit too overvalued these days. Considering the long-term trend of Poland’s current account, I think the currency needs to be cheaper, ideally by 20 per cent as long as I refer to the NBP’s statistics, to enter into the ERM2. It does not mean that I disagree with Mr Belka: He is only perfectly faithful as a central banker, who is not supposed to use the monetary policy to directly boost his economy’s export industry, which is others’ job. What Germany did is to fix the mark cheap compared with the then long-term trend of its current account to support its export industry, especially the manufacturing. What China is doing is similar to Germany’s strategy. It is a one-time currency manipulation of an economy to pursue its long-term development at the cost of its short-term purchasing power. If the economy has developed equity capitals faster than its growth, then its development will be consolidated by that much. The strategy aggravates the international macroeconomic imbalance indeed, but the imbalance is aggravated in any way as long as ‘markets are always wrong’. Then, it is better to become a creditor nation than to remain a debtor nation in such a financial jungle. It is a method of machiavellianist pragmatism for an economy to survive. After all, the ERM2 programme is itself a form of currency manipulation. It is more important not to be gullible then than to argue for or against currency manipulation. See what is happening to the sucker nations like Ireland and Greece. Keep this talk to yourselves, to avoid political troubles.

I do not regard that the MEFO bills being issued to private pension funds as the type of scheme of ‘sweeping debts under the rug’. As I wrote to Mr Sobczyk’s entry dated Nov 18, 2010 9:33 AM, I would rather criticize the European Commission for the stubbornness that will certainly discourage pension reforms throughout the EU. Poland is not all alone: Sweden stands by Poland on this issue. Hungary, the economy having already been in the soup, has decided to re-nationalise the private pension funds. I assume that, unlike IOU notes or Nazi MEFO bills, Poland’s ‘pension bonds’ scheme is being forged merely as a tentative solution for a relatively short period of time during which Poland and Sweden will probably, or rather certainly, lobby in Brussels to change the regulation while they proceed with the pension reform. If they fail, they may naturally have to re-nationalise all the private pension funds in the long run, and thousands of financial middlemen may lose their jobs and blame Fitch for having put too much heat on them. Rather, I think rating agencies should bring both the European Union and commissioners in charge to a kangaroo court in the first place for virtually blocking the pension reform that some of the member states like Poland and Sweden are struggling for if it really wants to care about investors’ welfare.

10:24 pm November 27, 2010

Jan wrote:

Although the central bank governor Marek Belka says something different, I regard the zloty, apparently converging into the region of 0.25 euro, as a bit too overvalued these days. Considering the long-term trend of Poland’s current account, I think the currency needs to be cheaper, ideally by 20 per cent as long as I refer to the NBP’s statistics, to enter into the ERM2.

It does not mean that I disagree with Mr Belka: He is only perfectly faithful as a central banker, who is not supposed to use the monetary policy to directly boost his economy’s export industry, which is others’ job.

What Germany did is to fix the mark cheap compared with the then long-term trend of its current account to support its export industry, especially the manufacturing. What China is doing is similar to Germany’s strategy. It is a one-time currency manipulation of an economy to pursue its long-term development at the cost of its short-term purchasing power. If the economy has developed equity capitals faster than its growth, then its development will be consolidated by that much. The strategy aggravates the international macroeconomic imbalance indeed, but the imbalance is aggravated in any way as long as ‘markets are always wrong’. Then, it is better to become a creditor nation than to remain a debtor nation in such a financial jungle. It is a method of machiavellianist pragmatism for an economy to survive.

After all, the ERM2 programme is itself a form of currency manipulation. It is more important not to be gullible then than to argue for or against currency manipulation. See what is happening to the sucker nations like Ireland and Greece. Keep this talk to yourselves, to avoid political troubles.

5:12 am November 30, 2010

Bartek wrote:

Polish GDP growth has jumped to 4.2% in the 3rd quarter (compared with 3.5% in the 2nd) powered mainly by domestic consumption and investments which is consistent with falling unemployment figures.

9:11 pm November 30, 2010

Jan wrote:

(I tried to post this comment the other day only to fail somehow. The server would not accept. I am now trying again.)

Although the central bank governor Marek Belka says something different, I regard the zloty, apparently converging into the region of 0.25 euro, as a bit too overvalued these days - theoretically. Considering the long-term trend of Poland’s current account, I think the currency needs to be cheaper, ideally by 20 per cent as long as I refer to the NBP’s statistics, to enter into the ERM2. It does not mean that I disagree with Mr Belka: He is only perfectly faithful as a central banker, who is not supposed to use the monetary policy to directly boost his economy’s export industry, which is others’ job. What Germany did is to fix the mark cheap compared with the then long-term trend of its current account to support its export industry, especially the manufacturing. What China is doing is similar to Germany’s strategy. It is a one-time currency manipulation of an economy to pursue its long-term development at the cost of its short-term purchasing power. If the economy has developed equity capitals faster than its growth, then its development will be consolidated by that much. The strategy aggravates the international macroeconomic imbalance indeed, but the imbalance is aggravated in any way as long as ‘markets are always wrong’. Then, it is better to become a creditor nation than to remain a debtor nation in such a financial jungle. It is a method of machiavellianist pragmatism for an economy to survive. After all, the ERM2 programme is itself a form of currency manipulation. It is more important not to be gullible then than to argue for or against currency manipulation. See what is happening to the sucker nations like Ireland and Greece. Keep this talk to yourselves, to avoid political troubles.

I do not regard that the Polish version of MEFO bills being issued to private pension funds as the type of scheme of ‘sweeping debts under the rug’. As I wrote to Mr Sobczyk’s entry dated Nov 18, 2010 9:33 AM, I would rather criticize the European Commission for the stubbornness that will certainly discourage pension reforms throughout the EU. Poland is not all alone: Sweden stands by Poland on this issue. Hungary, the economy having already been in the soup, has decided to re-nationalise the private pension funds. I assume that, unlike IOU notes or Nazi MEFO bills, Poland’s ‘pension bonds’ scheme is being forged merely as a tentative solution for a relatively short period of time during which Poland and Sweden will probably, or rather certainly, lobby in Brussels to change the regulation while they proceed with the pension reform. If they fail, they may naturally have to re-nationalise all the private pension funds in the long run, and thousands of financial middlemen may lose their jobs and blame Fitch for having put too much heat on them. Rather, I think rating agencies should bring both the European Union and commissioners in charge to a kangaroo court in the first place for virtually blocking the pension reform that some of the member states like Poland and Sweden are struggling for if it really wants to care about investors’ welfare.

9:20 pm November 30, 2010

Jan wrote:

(I tried to post this comment the other day only to fail. The server would not accept it somehow. I am now trying again.)

Although the central bank governor Marek Belka says something different, I regard the zloty, apparently converging into the region of 0.25 euro, as a bit too overvalued these days - theoretically. Considering the long-term trend of Poland’s current account, I think the currency needs to be cheaper, ideally by 20 per cent as long as I refer to the NBP’s statistics, to enter into the ERM2.

It does not mean that I disagree with Mr Belka: He is only perfectly faithful as a central banker, who is not supposed to use the monetary policy to directly boost his economy’s export industry, which is others’ job.

What Germany did is to fix the mark cheap compared with the then long-term trend of its current account to support its export industry, especially the manufacturing. What China is doing is similar to Germany’s strategy. It is a one-time currency manipulation of an economy to pursue its long-term development at the cost of its short-term purchasing power. If the economy has developed equity capitals faster than its growth, then its development will be correspondingly consolidated.

The strategy would aggravate the international macroeconomic imbalance indeed, but the imbalance would be aggravated in any ways as long as ‘markets are always wrong’. Then, it is better to become a creditor nation than to remain a debtor nation in such a financial jungle. It is a method of machiavellianist pragmatism for an economy to survive.

After all, the ERM2 programme is itself a form of currency manipulation. It is more important not to be gullible then than to argue for or against currency manipulation. See what is happening to the sucker nations like Ireland and Greece. Keep this talk to yourselves, to avoid political troubles.

(to be continued…)

Add a Comment

Error message

Name

We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

About Emerging Europe

Emerging Europe Real Time provides sharp analysis and insight into what’s making news in Central and Eastern Europe. Drawing on the expertise of our reporters in the Czech Republic, Hungary, Poland, Russia and Turkey, the site provides an inside track on economics, politics and business in this emerging part of the European continent.